Hi, Shrewd!        Login  
Shrewd'm.com 
A merry & shrewd investing community
Best Of BRK.ABest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd
Search
Shrewd'm.com Merry shrewd investors
Search
Best Of BRK.ABest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd


The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
Answer this questionContinue to Shrewd'mThis note won't appear again
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
Unthreaded | Threaded | Whole Thread (18) |
Author: mungofitch 🐝🐝🐝 GOLD
SHREWD
  😊 😞

Number: of 21944 
Subject: Re: Calls: end of an era?
Date: 10/28/23 4:31 PM
Post New | Post Reply | Report Post | Recommend It!
No. of Recommendations: 11
I'd be interested to hear if you'd still make / are still making this trade, all else being equal, and/or how you'd think about the decision when the math is this close.

I'm, not sure. I'm making it up as I go along.

To date I have been hoping that the economy would crack, and the interest rate forecasts would fall before I have to roll too many at high implied rates.
So I have been partly delaying rolling my contracts, and rolling to dates with shorter expiration dates than usual.
But that has not only not worked, but worked against me recently. Any buying on dips will be of shares, not calls, for now.

I still expect a US recession, but the housing situation seems to have delayed it...a strange hangover from the free money years.
(so many people have locked in low-rate mortgages, nobody wants to sell or can afford to, so there is very low inventory, meaning marginal house price transactions are holding up oddly well, meaning people are still feeling the wealth effect and the banks are still over-optimistic about LTVs...)
I was expecting recession to set in some time this winter, but maybe a bit later now? There are certainly already big cracks showing in the pocketbooks of those less well off.

In any case, I try to remember I'm not borrowing the full amount.
If you buy a call with 2:1 leverage and a horrible 8% implied interest rate, the stock price only has to rise a nominal 4% to cover the "interest" payment and get you to breakeven.

Jim
Post New | Post Reply | Report Post | Recommend It!
Print the post
Members reply directly to mungofitch here — and replies get answered. Reading is free; so is joining the conversation. Join Shrewd'm »
This community has written 21,448 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 57 recs · 2023
Summary of 2Q 2026 · 54 recs · 2026
3Q Summary · 53 recs · 2024
Unthreaded | Threaded | Whole Thread (18) |


Announcements
Berkshire Hathaway FAQ
Contact Shrewd'm
Contact the developer of these message boards.

Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Followed Shrewds | Open Questions | Moving a community